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Georgia Waivers: At Least as Costly to Cover Far Fewer People Than Medicaid Expansion

We’ve updated this post to reflect that Georgia’s Medicaid 1115 waiver would apply to residents with incomes at or below the poverty line.

Under two recent state proposals to waive federal Medicaid and Affordable Care Act rules, Georgia would spend at least as much to extend coverage to about 400,000 fewer people than if it adopted the ACA’s Medicaid expansion. And one waiver would likely cut, rather than increase, coverage.

Governor Brian Kemp announced that Georgia will seek a Medicaid 1115 waiver that would let residents with incomes at or below the poverty line qualify for Medicaid coverage only if they meet a harsh work requirement and begin paying premiums before they’re enrolled. There would be no exemptions, so those who cannot work due to a disability, serious illness, or caregiving responsibilities could not get coverage.

Although the state estimates that over 408,000 non-elderly uninsured adult Georgians have incomes below the poverty line — and other estimates show most are in working families — Georgia projects that only about 50,000 people will eventually enroll in Medicaid because the rest won’t be able to meet the waiver’s burdensome requirements.

Under Trump Administration policy, Georgia won’t receive enhanced federal funding for its waiver, since it’s not adopting the full ACA Medicaid expansion that would make adults with incomes up to 138 percent of poverty eligible for coverage. (The federal government covers at least 90 percent of the cost of expansion coverage.) That means the state will spend about $66 million of its own funds to cover this new group of adults in 2022, based on the waiver’s cost estimates and Georgia’s federal match rate of 67.3 percent.

Meanwhile, a second waiver (an ACA 1332 waiver) would radically overhaul the state’s health insurance market. Under it, Georgia would establish a reinsurance program, as other states have done, but it would also exit the platform without creating its own marketplace. Instead, consumers could enroll in coverage only through private web brokers and insurers.

The state is also proposing to create its own subsidies in place of the ACA’s federal premium tax credits, which help low- and moderate-income people buy insurance. Consumers could use these subsidies to buy plans that don’t meet ACA standards, including plans that exclude essential health benefits such as maternity coverage, mental health and substance use treatment, and prescription drugs. And the total amount of the subsidies would be capped and distributed on a “first in, first out” basis — meaning that, unlike under current tax credit policy, eligible people could be denied assistance.

Georgia estimates it will spend up to $255 million on the waiver in 2022. A state user fee on health plans, replacing the federal user fee, would raise $107 million, while the remaining $149 million apparently would come from the state’s general fund budget.

About 30,000 people will gain coverage through the 1332 waiver, the state estimates. But in reality, it’s more likely to reduce coverage overall. That’s because letting people use subsidies to buy substandard plans would create adverse selection, as healthy people enroll in lesser coverage and leave sicker people in ACA plans, causing premiums for those plans to rise. Because subsidies would continue to be based on ACA plan premiums, rising ACA premiums would drive higher per-person subsidy costs as well. That means providing subsidies to all eligible people would almost certainly cost more than Georgia is budgeting, triggering the waiver provision that would cap enrollment in subsidies. Without subsidies, many low- and moderate-income people would be unable to afford coverage, causing them to become uninsured.

All told, the state will spend $322 million — or about $215 million excluding costs covered by user fees — to extend coverage to just under 80,000 Georgians under the two waiver proposals, according to its own estimates, while upending its entire insurance market.

In contrast, the state could spend between $188 million and $213 million to extend Medicaid coverage to 487,000 to 598,000 residents if it joins 34 other states in accepting the full ACA Medicaid expansion. While some of those gaining Medicaid would otherwise have had marketplace coverage, 473,000 Georgians would gain health insurance through the expansion, the Urban Institute estimates. That would let Georgia realize the full benefits of expanded coverage, including improved access to care and financial security for people gaining coverage, decreases in uncompensated care costs, and fewer premature deaths.